Evidence-based policy making
IZA World of Labor is an online platform that provides policy analysts, journalists, academics and society generally with relevant and concise information on labor market issues. Based on the latest research, it provides current thinking on labor markets worldwide in a clear and accessible style. IZA World of Labor aims to support evidence-based policy making and increase awareness of labor market issues, including current concerns like the impact of Covid-19, and longer-term problems like inequality.
Do labor costs affect companies’ demand for labor?
Overtime penalties, payroll taxes, and other labor policies alter costs and change employment and output
Higher labor costs (higher wage rates and employee benefits) make workers better off, but they can reduce companies’ profits, the number of jobs, and the hours each person works. The minimum wage, overtime pay, payroll taxes, and hiring subsidies are just a few of the policies that affect labor costs. Policies that increase labor costs can substantially affect both employment and hours, in individual companies as well as in the overall economy.
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Promoting internal whistleblowing in organizations
Internal whistleblowing results in reduced fraud, a better brand image, and a higher overall performance
Eve-Angeline LambertYannick Gabuthy , November 2024Internal whistleblowing refers to the decision of an employee observing a misconduct in a firm to report it through an internal channel, i.e. via a hotline or directly to an identified ombudsman. Whistleblowing is highly beneficial to firms in various ways. However, employees may be reluctant to blow the whistle, both for moral reasons and due to a fear of retaliation. Consequently, a firm aiming at encouraging whistleblowing in order to save judicial or reputation costs, fines, and to spare its reputation should consider a wide range of possible measures in addition to developing a global ethical culture.MoreLess -
Fertility decisions and alternative types of childcare Updated
Relative costs and family characteristics determine the effectiveness of different forms of childcare
Increasing population age and low fertility rates, which characterize most modern societies, compromise the balance between people who can participate in the labor market and people who need care. This is a demographic and social issue that is likely to grow in importance for future generations. It is therefore crucial to understand what factors can positively influence fertility decisions. Policies related to the availability and costs of different kinds of childcare (e.g. formal care, grandparents, childminders) should be considered after an evaluation of their effects on the probability of women having children.MoreLess -
The shadow economy in industrial countries Updated
Reducing the size of the shadow economy requires reducing its attractiveness while improving official institutions
Dominik H. Enste , October 2024The shadow (underground) economy has a major impact on society and economy in many countries. People evade taxes and regulations by working in the shadow economy or by employing people illegally. On the one hand, this unregulated economic activity can result in reduced tax revenue and fewer public goods and services, lower tax morale and less tax compliance, higher control costs, and lower economic growth rates. But on the other hand, the shadow economy can be a powerful force fostering institutional change and boosting the overall production of goods and services in an economy. The shadow economy has implications on the political order and institutional change.MoreLess -
Entrepreneurs and their impact on jobs and economic growth Updated
Productive entrepreneurs can invigorate the economy by creating jobs and new technologies, and increasing productivity
Alexander S. Kritikos , October 2024Entrepreneurs, creators of new firms, are a rare species. Even in innovation-driven economies, only 1–2% of the work force starts a business in any given year. Yet entrepreneurs, particularly innovative entrepreneurs, are vital to the competitiveness of the economy and may establish new jobs. The gains of entrepreneurship are only realized, however, if the business environment is receptive to innovation. In addition, policymakers need to prepare for the potential job losses that can occur in the medium term through “creative destruction” as entrepreneurs strive for increased productivity.
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Using instrumental variables to establish causality Updated
Even with observational data, causality can be recovered with the help of instrumental variables estimation
Grigory AleksinSascha O. Becker , September 2024Randomized control trials are often considered the gold standard to establish causality. However, in many policy-relevant situations, these trials are not possible. Instrumental variables affect the outcome only via a specific treatment; as such, they allow for the estimation of a causal effect. However, finding valid instruments is difficult. Moreover, instrumental variables (IV) estimates recover a causal effect only for a specific part of the population. While those limitations are important, the objective of establishing causality remains; and instrumental variables are an important econometric tool to achieve this objective.MoreLess -
Estimating the return to schooling using the Mincer equation Updated
The Mincer equation gives comparable estimates of the average monetary Returns of one additional year of education
Harry Anthony Patrinos , August 2024The Mincer equation—arguably the most widely used in empirical work—can be used to explain a host of economic, and even non-economic, phenomena. One such application involves explaining (and estimating) employment earnings as a function of schooling and labor market experience. The Mincer equation provides estimates of the average monetary returns of one additional year of education. This information is important for policymakers who must decide on education spending, prioritization of schooling levels, and education financing programs such as student loans.MoreLess -
Does increasing the minimum wage reduce poverty in developing countries? Updated
Whether raising minimum wages reduces—or increases—poverty depends on the characteristics of the labor market and Households
T. H. Gindling , August 2024Raising the minimum wage in developing countries could increase or decrease poverty, depending on labor market characteristics. Minimum wages target formal sector workers—a minority in most developing countries—many of whom do not live in poor households. Whether raising minimum wages reduces poverty depends not only on whether formal sector workers lose jobs as a result, but also on whether low-wage workers live in poor households, how widely minimum wages are enforced, how minimum wages affect informal workers, and whether social safety nets are in place.MoreLess -
Sexual harassment in the workplace Updated
The #MeToo movement brought heightened attention to sexual harassment and a search for new approaches to combat it
Joni Hersch , July 2024Workplace sexual harassment is internationally condemned as sex discrimination and a violation of human rights, and more than 140 countries have enacted legislation prohibiting it. Sexual harassment increases absenteeism and turnover and lowers productivity and job satisfaction. Yet, it remains pervasive and underreported, as the #MeToo movement starkly revealed in October 2017. Standard workplace policies such as training and a complaints process have proven inadequate. Initiatives such as bans on confidential settlements and measures that support market incentives for deterrence may offer the most promise.MoreLess
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Dec 01, 2024
Peer mentoring enhances university choices and performance for high school students
Study highlights positive influence on students' academic trajectory -
Nov 28, 2024
Political polarization undermines individuals’ rule-following behavior
Experimental research reveals how group identity shapes compliance with rules, even when the rules are identical -
Nov 21, 2024
Flash IZA/Fable SWIPE Consumption Index above six percent in November 2024
Real-time insights into consumer spending complement survey-based sentiment indicators -
Nov 13, 2024
Fewer exam retakes, better results?
Policy change at the University of Bologna improved academic performance and reduced dropout rates
How market concentration impacts minimum wage effects
The hidden cost of teacher selection reform in Colombia
Do productivity signals reduce disability-related hiring discrimination?
How education drives the economic success of immigrants from China in the US
Unintended consequences: How Pinochet’s policies empowered Chilean women
The long-run effects of affirmative action bans
How fast internet is shaping local culture and harmful traditional norms?
Effects of parental death on labor market outcomes and gender inequalities
Are employers eager to hire the unemployed?
The surprising effects of education on family dynamics for men and women
Decoding gender bias: The role of personal interaction
10 years of IZA World of Labor